MARKET CLOSE: NZ shares up broadly on dollar weakness

Aug. 10 (BusinessDesk) - New Zealand shares gained on
continued market strength from the weaker Kiwi dollar, led
higher by Trade Me Group and A2 Milk Co, while Fonterra
Shareholders Fund dropped as its expected final dividend was
removed.

The S&P/NZX50 Index rose 70.42 points, or 0.8
percent, to 9,010.61. Within the index, 40 stocks rose,
seven fell and three were unchanged. Turnover was $111
million.

Greg Easton, investment adviser at Craigs
Investment Partners, said it was a fairly positive day for
the benchmark index, with yesterday's boost from the weaker
New Zealand dollar following the more dovish than expected
official cash rate outlook from the Reserve Bank carrying
over.

"Some of the biggest movers are the dual-listed
NZ-Australia stocks. It could be that Australian investors
are seeing a bit of value with the Aussie dollar buying
$1.11 versus under $1.10 a couple of days ago," Easton
said.

The notable exception to today's strength was
Fonterra Shareholders Fund units, down 2.5 percent to $4.98.
Fonterra Cooperative Group doesn't expect to pay a final
dividend this year, as it bolsters its balance sheet after
paying Danone over the 2013 botulism scare and writing down
its Beingmate Baby & Child Food investment.

The dairy
processor affirmed normalised earnings per share guidance of
25-30 cents, implying earnings of $403 million to $484
million, but indicated it's likely to be at or slightly
below this range, and anticipates dividends will only be the
10 cents per share already paid in April. It also trimmed
its 2017/18 forecast farmgate milk price to $6.70 per
kilogram of milk solids from $6.75/kgMS.

"It's a chance
for the new chairman to show his stance on capital structure
and balance sheet strength and he has emphasised that it's
all about strengthening the balance sheet after what has
been a pretty terrible year in terms of cash coming out for
no good reason. They mentioned specifically the payment to
Danone and the impairment on the Beingmate investment,"
Easton said.

"This is the first time in recent years that
they've been so severe on withholding cash, and it is a bit
of a surprise because they have been in a position where
they've had to help farmers out to find other ways to get
cash when the payout has been low. This is a bit of a
turnaround on that behaviour."

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